World Bank loans $30 Million to Sierra Leone as government struggles for cash

Sierra Leone Telegraph: 26 July 2017

Since coming to power in 2007 with a new dogma and promise to ‘run Sierra Leone like a business’, president Koroma is far from translating this promise into a viable programme for development.

His time has now almost run out, as he prepares to leave office next year. So how will history judge the president, who has brought much controversy to the meaning of good governance and economic hardship to Sierra Leone?

The president has faced constant lampooning from the opposition and critics, for ‘running the country like a family business’. Instead of serving the nation, he has promoted the personal interests of the Koroma family and senior political associates, critics say.

Since coming to power in 2007, the ruling party has grown the country’s public debt from almost zero to about $4 Billion and counting.

Yet there is very little social and economic development in the country to show for such massive government borrowing.

Ministers and supporters of the government point to the hundreds of miles of new and refurbished roads that the president’s Agenda for Prosperity has prioritized and constructed, paid for by borrowed funds.

But the government has been struggling to meet its revenue generating goals even before Ebola struck in 2014, despite a one-off 11% increase in Gross domestic Product (GDP) in 2011. Tax receipts are failing to match government spending.

Overseas aid have been cut by over 40% by international donors. Both the World Bank and IMF have now become the government’s main source of revenue financing, out of fear that should the economic situation deteriorates, there could be political and social unrest in the streets.

But by propping up a failed and incompetent government, for fear it might collapse under the weight of public disaffection, the World Bank and the IMF are being accused of throwing good money at bad policies and bad politics.

Early this month, the government received a US$30 million International Development Association (IDA) credit from the World Bank Group. But to do what?

According to the World Bank, the loan is being provided to help the government achieve what it promised over ten years ago but has failed: “To achieve sustainable and inclusive economic development through increasing productivity in selected economic sectors, and improving transparency and accountability in selected government decision-making processes.”

The reality is that each time the government fails to meet its own economic objectives and milestones set by the World Bank and the IMF, it complains about the lack of finance. And each time it complains, the World Bank will simply throw more loans at the government to pay for its reckless spending and incompetence.

Same as in previous loan agreements, this time around the $30 million will support agriculture and land development, fisheries, energy, education, procurement, and asset disclosure, over the next three years.

Specifically, the money would be used to cover the costs of a plethora of failed government policies, ranging from: farming seed production and distribution by the private sector; a new fertilizer policy that encourages private sector participation in the supply and distribution of fertilizers; moving ahead with a land policy implementation plan; ensuring that all industrial fishing vessels have a Vessel Monitoring System (VMS) or Automatic Identification System (AIS) and observers on board; ensuring that the country’s Electricity, Distribution and Supply Authority has an approved strategic plan; that the Ministry of Education, Science and Technology (MEST) has an agreed timeline for the transfer of files, records and functionaries from MEST to the Teaching Service Commission (TSC); implement an eProcurement system; and to fully implement the asset declaration system of the Anti-Corruption Commission.

All of that, at a cost of $30 million the government says it cannot afford. So it has gone cap in hand yet again to borrow from the World Bank, pushing the country further into debt.

Indeed few would deny that Sierra Leone’s economy has been severely hit by the persistently low iron ore prices in the wake of the Ebola crisis, with severe adverse consequences on growth, export receipts and fiscal revenue.

But what is unacceptable is the lack of determination, commitment and drive by the government to implement workable industrial diversification strategies, and ensure meaningful investment in rehabilitating the country’s electricity and water sectors.

According to conservative World Bank figures, poverty has increased to 49% in 2015, up from 46% in 2014, because of what it describes as the sharp contraction in per capita income in 2015. It says that this downturn could have ended with the moderate economic recovery in 2016.

But no one knows the full extent of the impact of the government’s economic failure on poverty, until figures are published later this year.

What is certain is that the World Bank says that the fiscal situation remains very challenging in the context of weak domestic revenue mobilization and continued pressure on public expenditures. Yet the government continues to spend beyond its means.

So by lending the Koroma government another $30 million a few weeks ago, the World Bank says that it is hoping to stabilise the country’s economy, as well as promote the diversification of the key growth sectors, employment, exports, and domestic revenue, build resilience and promote social stability.

“The funding will support critical policy reforms in productive sectors and in governance to promote sustainable and inclusive growth and build economic resilience,” says Parminder Brar, World Bank Country Manager for Sierra Leone.

But who is truly running Sierra Leone? Is it the World Bank or president Koroma, whose government has presided over ten years of economic misery and poverty for millions of people?